As previously discussed in this blog, the Maine based religious organization known as the Gentle Wind Project is an organization that tries to get people to buy its bogus health products (it calls the payments donations), and has harassed former members with frivilous lawsuits. A federal lawsuit was dismissed and a new one was commenced in Maine's state courts.
Now, the attorney general of Maine has stepped into the fray. A copy of the attorney general's complaint is available here.
The complaint alleges that the Gentle Wind Project has intentionally made false claims regarding the health benefits of its remedies, failed to disclose that testimonials came from people with a financial interest in the organization, improperly characterized purchases of health products as charitable donations, failed to keep proper non-profit organization records, and used charitable funds for improper purposes on multiple occasions.
As relief the attorney general seeks to have the claims declared fraudulent, to ban the use of the false claims to sell the remedies, to collect sales taxes on the sales of the products, to declare that the leaders of the group of breached their fiduciary duties and bar them from official roles in any Maine charities, to force the leaders to disgorge the benefits they have received, to ban the leaders from operating under the name of the organization, to freeze the organization's assets, to dissolve the organization as a non-profit under the supervision of a receiver, to reimburse everyone who was defrauded, to distribute anything left over for the benefit of the mentally ill, and to assess hefty civil fines against the leaders.
In short, the attorney general has done everything short of bringing criminal charges against this group and its leaders, vindicating the claims that those who have been sued by the organization have been making all along. Because the claims involve breaches of fiduciary duty, the debts could not even be escaped through bankruptcy, which is probably where most of the leaders of this group are headed in the near future.
Because no criminal charges were brought, the attorney general will need to meet a "preponderance of the evidence" standard, rather than a "beyond a reasonable doubt" standard. The attorney general will also be able to compel leaders to either testify under oath about their conduct, or claim the 5th and allow the judge or jury to make negative inferences from that decision. The decision not to bring criminal charges also deprived the organization and its leaders from a right to representation from the public defender if they can't afford their own attorneys. And, the decision to bring civil charges allows the attorney general to obtain preliminary and injunctive relief from a judge, and greatly limits the scope of the issues, if any, which can go before a jury. Generally speaking, there is no right to a trial by jury in matters in which relief other than money damages is sought, and in matters concerning breaches of fiduciary duties by corporate officers and directors.
Of course, if the leaders of the group choose to testify, rather than taking the 5th, anything they say can and will be used against them in later criminal cases, and nothing prevents the attorney general from bringing criminal charges against the leaders after this case is concluded, or parallel to it. Since many of the sales were interstate transactions, federal civil and criminal charges are also possible once the attorney general has laid out the factual basis for the state charges.
Almost every state attorney general has general supervisory authority over charities in that state, but it is very rarely exercised, and when it is, the suits are frequently brought when there is overwhelming evidence that a non-profit has spun entirely out of control, as the Gentle Wind Project has, to the point where it has become a virtual criminal enterprise (although the AG's suit does not itself make any civil RICO claims). If this suit is successful it could serve as a step by step manual on how to shut down organizations that make intentionally false health claims and try to use a religious or charitable status to cover their tracks.